Funding the Covid-19 Vaccine – Africa’s supplementary budget
By Emmanuel Allottey
The impact of COVID-19 has pushed African nations into economic decline. The availability of a Covid-19 vaccine has mandated African nations to reprioritise their existing budgets, utilise national reserves, or adopt supplementary budgets to fund the procurement of the vaccine.
The implementation of different economic interventions to mitigate the impact of COVID 19 by African governments has proven costly and stretched an already constricted budget. Securing funding of the Covid-19 vaccine has become priority for governments seeking to accelerate their economic recovery.
The implementation of different economic interventions to mitigate the impact of COVID 19 and accelerate economic recovery will require unprecedented policy decisions. African nations are battling low government revenues, increasing fiscal deficit and demand for public expenditure to drive economic growth. The creation of a supplementary budget to fund the procurement of vaccine will require the introduction of additional revenue generating sources either through direct or indirect taxes or other tariff increases.
African nations will have to draw on a wide range of funding sources, self-funding, borrowing, grants and donations to maximise funds available to procure the vaccine. The governments national vaccine strategy to inoculate the population will be the major determinant of the financial provision to be created.
The cost of buying and distributing vaccines is estimated to average ten dollars per dose, which multiplied by the population size becomes significant cost that may need to be incurred over two or three years. African nations do not have the financial means to self-fund the procurement of the vaccine and will rely heavily on borrowing. Support from the African Export-Import Bank, will facilitate payments for the vaccine by providing advance procurement commitment guarantees of up to $2 billion, will help governments to secure financing for those deals.
Economically challenged nations in Africa, through the United-Nations-co-led COVAX initiative are able to gain access the vaccine. The COVAX initiative aims to procure and distribute vaccines to economically-challenged countries worldwide and the African continent with the largest cluster of the poorest nations in the world will benefit from this initiative. In total, COVAX aims to deliver at least 2 billion doses of COVID-19 vaccines by the end of 2021, including at least 1.3 billion to the 92 economies eligible for support.
The benefits of procuring the vaccine outweighs the cost of an economic standstill caused by government imposed national lockdowns. African nations looking to accelerate their economic recovery in 2021, will have to prioritise vaccine procurement in their budgets.